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Tax Audit Under Income Tax

Tax Audit Under Income Tax

Income Tax Audit | Under Tax Audit in India

Tax Audit is basically a legal compliance by income tax Act to understand with income tax audit lets understand what is audit, Audit is examining and checking of books of accounts by an auditor, similarly income tax law also mandates and audit which is known as Tax audit under income tax act if the firm or individual crosses the Threshold limit as prescribed by the income tax Act.

Income Tax Audit

Tax Audit is an independent audit by Chartered accountant in full time Practice considering the matter related to Taxation only and also a report confirming that there is no concealment of income by the Taxpayers and there are also no dues of liability to be paid all dues are paid on time. The Tax Audit is a Compulsory obligation on Taxpayers where the turnover during the previous year is more than the limit prescribed under section 44AB.The due date for filing Tax Audit report is 30th September of the following assessment year. In Case the tax audit return is not filed within the prescribed time then the taxpayer is required to pay penalty of amount of 1.5% of the gross receipts, subject to Maximum 1.5 lac.

Partnership Firm Registration

Objectives of Tax Audit:

> To ensure correctness of and accurate maintenance of books of accounts by means of certification by the chartered Accountant and help in facilating the income tax department to identify the correctness of income.

> To report any error and discrepancies by the auditor after systematic verification of books of accounts.

> To Provide relevant information to the income tax department such as Depreciation allowable under companies act and income tax act, Deduction of tax.

TAX Audit Report Forms FORM 3CA:

The tax audit report is prepared as per Form 3CA in case when the taxpayer is also required to gets its books of Accounts audited, For instance in case of company every company is required to get its books audited under the companies Act 2013.

Particulars of Form 3CA

  • Personal details of the assesses such as Aadhar card, pan card.
  • Number and section of the law such as remuneration, Depreciation etc.
  • Date of Audit Report
  • Period of profit and loss account
  • Date of Balance sheet
  • Declaration
  • Place of Signing
  • Name, address and membership number of the auditor
  • Stamp of the auditor.


Form 3CB is applicable in case of individual and taxpayers who is not required to get its books of accounts audited under any law, like Salaried individual or firms if their income is more than 1 crore. In case of presumptive income the limit is 2 crore.

 Particular of Form 3CB

  • Date of Balance Sheet
  • Period of Profit and loss account.
  • Name and address of Taxpayer
  • Address where books are kept
  • Audit observation report by the auditor about the qualification of report, and any discrepancies related to the report.
  • Declaration by the auditor regarding whether all information is received or not, whether accounts has been maintained or not etc.
  • Name, address and membership number of the audior.


Form 3CD is an annexure of form 3CA and form 3CB. The tax auditor is required to fill particulars details of the taxpayers for which tax audit was conducted.

Particulars of Form 3CD:

  • Name, address and pan details of the taxpayers
  • The taxpayer liability to pay and indirect tax dues of their Returns
  • Profit sharing ratio of the firm is disclosed in form 3cd.
  • In case of change in partners and profit sharing ratio is also included in form 3cd.
  • Whether books of accounts are prescribed as per section 44AA
  • Method of accounting pursued in the previous year.
  • Method of valuation of closing stock used in previous year.

Statutory Audit Vs Tax Audit

  • Statutory Audit is an audit which is required to be perform under the companies Act 2013.
  • Tax Audit is defined as audit of accounts of the taxpayers for the requirement of Section 44AB of income tax Act 1961.
  • Statutory Audit is applicable to all the companies registered under companies Act 2013.
  • Tax Audit is applicable on all companies, firms, LLP, Individuals whose turnover exceeds the threshold limit.
  • There is no Turnover Limit for statutory audit it is mandatory for all companies to undergo statutory audit.
  • Tax Audit is Mandatory for organization whose turnover exceeds 1 crore.
  • The Purpose of statutory audit is to ensure truthfulness of the financial statement of the company.
  • The Purpose of tax audit is to ensure proper maintenance of books of accounts that truly reflect the taxable income of the assesses.
  • Statutory Audit should be completed within 6 months from the closure of financial year but before conducting the Annual General Meeting.
  • The Due date for completing tax audit is 30th September of the next financial year.
  • Not filing of statutory audit will lead to imprisonment of upto 1 year or fine of Rs 10000 to 100000.
  • Non-Filing of tax audit will lead to penalty of 1.5% of the total gross receipt or Rs 150000.


Business If total sales, turnover or receipts is business for previous year is more than 1 crore.
Professional If total Sales, Receipts in previous year is more than 50 lakhs.

Presumptive incomes under 44AD,44EE

If total Sales and receipts is more than 2 crore in case of presumptive income.


Tax Audit is to be performed by all companies, Individuals who exceeds the prescribed limit as per section 44AB.

The purpose of Tax Audit is to ensure that income disclosed by the taxpayer is true and fair; the picture is given by the audit done by the chartered accountant.

If a person doesn’t get his accounts audited then penalty of 0.5% of gross receipt will be levied maximum of 1.5 lakh.

Due date for filing tax audit is 30th September of next financial year.

Yes if the person exceeds the prescribed limit under section 44AB, then he is required to go audit under income tax act.